Egypt eyes fourfold growth in renewables by 2035

From the newsletter

Egypt is projected to quadruple its current installed renewable energy capacity by 2035, reaching 31,600 MW, according to a report by GlobalData, a data analytics and consulting company. The country has recently increased its investments in large-scale renewable energy projects, with a focus on serving export markets in Europe and the Middle East.

• The government has also opened up the electricity market to private-to-private power supply. Last month, it approved the first 400 MW batch of projects specifically aimed at supplying industrial clients.

• Renewables Rising has tracked projects under development totalling at least 4,800 MW in wind and solar power and 2,300 MWh in battery energy storage. Some of these projects have secured financing and are now moving into the construction phase.

More details

• The report projects Egyptian renewable power installations to grow at a compound annual growth rate (CAGR) of 20.4% during 2024-35. The North African country's geographic location, which guarantees abundant sunshine and strong winds, positions it favorably to harness significant wind and solar power.   

• As of late 2024, the country's renewable installations stood at approximately 7,700 MW, accounting for around 11% of its total electricity generation capacity. Despite the progress in renewable additions, Egypt still faces the challenge of growing demand due to an increasing population and increased cooling demand during summer. In addition, gas supply chain issues are proving to be a headache with insufficient supply.

• The country is therefore pursuing renewables as a measure of energy security. By diversifying its generation mix, it aims to cut reliance on volatile fossil fuels and shield its economy from global energy shocks. But it remains far from its target of renewables generating 42% of its electricity by 2030.

• Significant structural shifts over the past decade are directing investment towards renewables. The country has introduced several policies, including competitive bidding for projects, Build-Own-Operate schemes, and a recent pilot of private-to-private power supply. All these have opened the market to more private sector participation. Furthermore, the government is removing fossil fuel subsidies to ensure they are cost-reflective and eliminate undue advantages.

• Together, this has opened a billion-dollar market for investors, with projections showing a $8.3 billion market size by 2035. Already, big Middle East energy companies like Masdar and AMEA Power have set their sights on the market and secured significant deals. Masdar is part of a consortium building the 1,800 MW Benban Solar Park and also plans a 10,000 MW wind farm. AMEA Power is leading the development of a 1,500 MWh battery energy storage plant and has a total of more than 2,500 MW across solar and wind projects.

• The pace of project development in Egypt is a positive indicator of how quickly they can achieve their renewable goals. Last month, two major projects were completed ahead of schedule, adding 1,000 MW to the grid.

Our take

• Egypt's economy suffers from soaring foreign debt that has reached nearly $160 billion. This limits the domestic credit available for green projects and strains public finances.

• However, the government's progressive engagement with the private sector could work to fill the gap. But it needs to guarantee investors stable policies, even beyond regime changes. This long-term policy certainty is crucial for building the confidence needed to attract and sustain private investment.

• Given the country's recent developments and partnerships with heavily backed Middle Eastern companies, Egypt is likely to achieve its renewable energy goals by 2035.